In a report last month, Lord Carlile argued that there was no 'suitable alternative' to control orders for terror suspects. Photograph: Toby Melville/PA

The chair of an influential committee of parliamentarians has questioned the independence of the official counter-terrorism watchdog, Lord Carlile, and suggested his term of office should come to an end.

Andrew Dismore, the Labour MP for Hendon who chairs the joint committee on human rights, said the life peer, who has reviewed anti-terrorist legislation since 2005, had lost credibility.

Carlile recently endorsed the government's control order regime for terror suspects, despite court rulings said to make the system unworkable. In a report last month, he argued that there was no "suitable alternative" to control orders, which place people under virtual house arrest on the basis of secret evidence.

"I think there is a risk of the perceptions of [Carlile's] independence being undermined, and that then undermines [his] credibility," Dismore said. "I think there ought to be a fixed term for his job."

Dismore spoke in a personal capacity after an oral hearing by his committee into the future of the control order system.

During the hearing, which heard evidence from human rights lawyers and "special advocates", the security-cleared lawyers appointed on behalf of control order suspects to hear secret evidence against them, Dismore asked whether Carlile's objectivity had "worn a little thin" over time. He was supported by Lady Falkner, who asked whether an official in such a post would "go native" over time.

Gareth Peirce, who has represented a number of terror suspects, said Carlile gave a "veneer" of credibility to the control order system, which she described as "on the rocks" after the legal challenges. "But the Home Office clings to the wreckage," she said.

Peirce added that although the system for dealing with terror suspects affected a small number of people, the impact was far broader in the Muslim community. "In terms of its contribution to what people might term the folklore of injustice, its impact is colossal," she said.

A better alternative to control orders was greater surveillance of suspects, she said. Her comments were echoed by Sean Mcloughlin, who has represented three control order suspects. He argued the £8m the government has spent on legal costs to defend the controversial system would have been better spent on intensive monitoring of terror suspects.